August 28, 2009

 

CBOT Corn Outlook on Friday: Seen 1-3 cents stronger on soybean spillover

 

 

Chicago Board of Trade corn futures are poised to start 1 to 3 per cents firmer Friday on spillover strength from soybeans, with traders continuing to keep a close eye on the weather.

 

In overnight electronic trading, CBOT December corn rose 2 1/4 cents to SU$3.31 1/2 per bushel.

 

Corn followed CBOT soybeans higher overnight and should continue to feel support from the neighboring market, traders said. Worries about tight old-crop supplies are expected to boost soybeans.

 

"Soybeans' strength is ongoing here," said Jerry Gidel, analyst at North America Risk Management Services. "Corn is getting some spillover."

 

Outside markets look mildly supportive, with crude oil and gold rising a bit, Gidel said. The U.S. dollar has "stabilized" a little, he said.

 

Traders continue to watch the weather amid expectations for a large U.S. crop. Development is delayed, which makes the crop more vulnerable in the event of an early freeze, but there is "no real threat" at this time, according to a note from Country Hedging.

 

T-Storm Weather said "no frost" will occur this weekend, though temperatures may approach 40 degrees Fahrenheit. Scattered showers and localized areas of heavy rain should fall across much of central and eastern corn and soybean areas through Friday, the private weather firm said.

 

Expectations for a large crop should loom over prices, an analyst said. However, the potential for a damaging frost should keep traders from pressing the market down too hard, Gidel said.

 

"This isn't the time of year be bullish the corn market," he said. "Harvest is around the corner. We've got plenty of corn in the bin."

 

In other news, traders and analysts expect few if any deliveries on first notice day. First notice day for the September futures contract is Monday, meaning it is the first day that notices of intention to deliver actual commodities against futures-market positions can be received.

 

Bulls' next upside price objective is to push CBOT December corn above solid technical resistance at SU$3.50, a technical analyst said. The next downside price objective for the bears is to push and close the contract below solid technical support at last week's low of SU$3.11 1/2, he said.

 

First resistance for December corn is seen at Thursday's high of SU$3.30 3/4 and then at this week's high of SU$3.37 1/2, the analyst said. First support is seen at SU$3.25 and then at Thursday's low of SU$3.20 3/4.